With much of the focus of trade talks and draft analysis being put on early 1st round draft picks, the value of 2nd round picks has quietly increased. Some of the highest profile teams with postseason aspirations are understanding the need for effective use of the 2nd round and how that can provide relief on their cap sheet even above minimum signings.
The Aprons
Much ado has been made of the addition of the 2nd apron and the additional restrictions around the aprons. These restrictions have lead to many teams that have been hard capped, especially those that use the Taxpayer Midlevel Exception (TPEs).1 Unlike the salary cap, there are no exceptions that will reduce the apron salary or allow the teams to go over whatever hard cap they are restricted by.2 Additionally, a team’s “apron salary” is calculated differently than their ordinary team salary for salary cap purposes. One of these escalators occurs when a team signs a player to a minimum salary.3 Ordinarily, if a player is signed to a minimum salary for less than the 2 Year of Service minimum, their salary would be whatever their contract calls for. However, if the player signs for an amount less than the 2 Years of Service (YOS) minimum for the given year, their salary is counted as the minimum salary for the 2 YOS row in he year that they sign when calculating apron salary.4
Red - Jamison Battle Salary Cap Salary
Green - Jamison Battle Apron Salary
For example, Jamison Battle signed a multi-year minimum contract last year. His salary cap salary is $1,955,377, but his apron salary is $2,191,897 (see table above). As teams begin hugging their hard cap, they are still required to keep their roster at the minimum number of players.5 This is where the 2nd Round Pick Exception connects.
The Mechanism
The 2nd Round Pick Exception allows a team that drafted a player in the 2nd Round to exceed the salary cap to sign the player.6 Seems pretty self-explanatory, I know. To use the exception, teams are required to sign the players to either a three or four year contract with the final year being a team option.7 Also, the first year in a three-year contract, or the first two years in a second year contract can be for more than the rookie minimum.8
Frenchieinportland, CC BY 4.0 https://creativecommons.org/licenses/by/4.0, via Wikimedia Commons
In this context, the use of the exception is not considered a free agent signing which means it would not fall under an elevated minimum.9 As such, this is one of the only times that a players rookie minimum salary would be calculated at it’s true number for apron salary purposes.
Essentially, the 2nd Round Pick Exception can be used to fill out a roster spot at a lower apron salary. For the reasons outlined in the above section, teams that are hard capped may need this additional flexibility to fill out their roster.
The Results
The most likely teams to use this mechanism are those that have used exceptions to bolster their roster towards a playoff push or championship run. Teams in this position need to maximize production in every roster spot, meaning that their draft strategy might noticeably change.
MGoBlog, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons
Teams making a push are now more likely to prioritize players later in the draft with significant experience in college that can step in and have a role on their roster. For example, the Warriors used the 2nd Round Pick Exception on Will Richard a 3-year starter out of Florida who stepped in as a Day-1 starter and has accumulated 25 starts this year.10 This is a departure from past years where late 2nd Round picks were thought of as either Two-Way players (which come with game and playoff restrictions) or ever stash candidates overseas. The practice of purchasing picks for cash also is restricted by a 2nd apron hard cap which may dissuade teams above this limit from making these transactions.11 Some players, like Nikola Djurisic, have even been stashed in the G League for a year before their team uses their non-elevated minimum the next year while filling out their roster. In conclusion, late pick value has increased significantly in the current environment and teams may be more hesitant to include them in future deals.
1 Art. VII Sec. 2(e)(4)(K)
2 Art. VII Sec. 2(e)(2)(i)
3 Art. VII Sec. 2(e)(1)(ii) & Sec. 2(d)(1)(i)(F)
4 Art. VII Sec. 2(e)(1)(ii) & Sec. 2(d)(1)(i)(F)
5 Art. XXIX Sec. 2
6 Art. VII Sec. 6(k)
7 Art. VII Sec. 6(k)(1)
8 Art. VII Sec. 6(k)(2)(i) & Sec. 6(k)(3)(i-ii)
9 Art. VII Sec. 2(d)(1)(i)(F)
10 NBA Golden State Warriors Stats & Fox Sports College Basketball Stats
11 Art. VII Sec. 2(e)(4)(I)